Links to Consider, 11/27

Noah Smith on wealth; Rob Henderson's notes on Jordan Peterson/Jean Twenge; Joseph Politano on the tech recession; Ian Leslie on doing good

Noah Smith

writes,

To borrow a phrase from Churchill, mark-to-market accounting is the worst form of accounting, except for all the others that have been tried. In the runup to the 2008 financial crises, many banks created highly complex products that were so byzantine and so bespoke that there was almost no market for them at all (remember “CDO-squared”?). Because these assets were almost never actually bought and sold, banks were unable to use mark-to-market accounting to value them at all, so instead they used something called mark-to-model accounting instead.

Actually, the models were calibrated to fit available market prices. But that is a quibble. I strongly with Smith’s larger point, which is that when an asset’s true value is uncertain and the market is illiquid, you cannot really be sure what a large holding will sell for. My periodic reminder that when I post a link, I recommend the whole essay.

Rob Henderson

writes,

• Boys’ antisocial behavior is overt; violence, theft, aggression, etc. For girls antisocial behavior takes the form of gossip, inuendo, reputation destruction, and back-biting. Social media facilitates this form of aggression. Indirect aggression scales online in a way that direct aggression does not. Penalties of overt aggression are clear; but you can more easily get away with covert aggression. Girls are now subject to bullying by their peers in a way they never have before. [You can’t punch a thousand people in the face at the same time, but you can get a thousand people to hate a single person overnight].

Henderson is annotating a conversation between Jordan Peterson and Jean Twenge, so I don’t know who exactly is making this point. But it aligns with my view of how society is changing to run by female methods (gossip at scale) rather than by male methods (impersonal rules). Again, there is much more in Henderson’s post. Also, I believe that Peterson is outstanding as an interviewer.

Joseph Politano

writes that some economists see the tech sector layoffs as a drop in the bucket in the overall economy.

That seemed to be the thesis of Goldman Sachs’ research note on the issue last Thursday. Although tech companies make up 1/4 of the S&P 500 they make up only a meager 0.3% of American employment. The tech industry “is not large enough for tech layoffs to cause a meaningful labor market slowdown on their own” and “tech job cuts have frequently spiked without a corresponding increase in cuts in other sectors and have otherwise been a coincidental indicator,” the note said.

Politano quibbles with this, but he does not reject it.

@Ian Leslie prefers workhorses to show horses. He writes,

Today’s generation of activists believe that brokering deals between elites is irrelevant and corrupting, a diversion from the work of “systemic change”. It is better to make a lot of noise in the media, raising the collective consciousness, inciting enough anger that politicians have no choice but to give in and do something. Do what, though? The answer is often left vague.

On Effective Altruism, he writes,

The fall of Bankman-Fried need not discredit the EA movement, which is mainly composed of good people trying to do good things. But it should raise a question over its model. …Scrutiny, dialogue and persuasion can be frustrating, and they certainly slow everything down. But they can produce solutions which are more scalable, workable and enduring.

The “leave it to the smart people” model is also dangerously under-diversified, like the old monarchical model of government.

Incidentally, on January 18 I wrote,

And here is Sam Harris interviewing, and slobbering over, young billionaire Sam Bankman-Fried. Not once does Harris ask the question of why it is more ethical for Bankman-Fried to donate his money in an unaccountable way than it is for him to invest his money in profit-seeking business. I don’t count on Congress allocating resources wisely, so I don’t favor wealth taxes. But I don’t count on any billionaire allocating resources wisely without any feedback mechanism.

I find Bankman-Fried scary, and my guess is that I would find other billionaires with his approach to altruism just as scary. I don’t think that any one person has as clear a picture of morality as Bankman-Fried and Harris believe that they own.

“I find Bankman-Fried scary.” No, I didn’t predict what he turned out to be. But don’t I deserve some status points for questioning the conventional wisdom back then?